Belarus’ social stability costs amid raising salaries

On August 8^th, Electronic Industry Trade Union leaders said that some workers at the Minsk-based ‘Transistor’ Semiconductors and Integrated Circuits Plant refused to work because of low wages (BYR 2.3 – 2.5 million).

Social stability at Belarus’ enterprises is relative and depends on the government’s ability to raise pays and to pay worker’s wages in time. The likelihood of strikes increases, when pay-rises slow down or when wages substantially lag behind the average wage in the country.

By mid-2013 the authorities face a serious problem: the population expects pay rises while it becomes increasingly difficult to find economic justification for it. In Q1-Q2 2013 the average real wage in Belarus increased by 20.5%, while the average monthly salary in Belarus in June was BYR 5,160,000 (circa USD 580). At the same time, consumer price inflation was 8% and labour productivity in GDP – 2.6%.

Such economic imbalance sooner or later had to force the authorities to take the action, and they found the simplest solution – to limit wage growth in the near future. In particular, Prime Minister Myasnikovich has already suggested to project real wage growth for 2014 at 6%. Minsk Mayor Ladutko also advocated for ending the wage growth in the capital city, where in June the average wage was the highest – BYR 6.66 million (circa USD750).

Simultaneously, in Belarus’ oblasts and regions the average wage deviates significantly from the country’s average, mostly due to higher wages in Minsk. For example, in May 2013 only in 11 of 127 regions the average wage was higher than the country’s average: mostly in industrial towns Soligorsk, Novopolotsk, Rechica, Mozyr, Zhodino and surrounding areas. On the contrary, in 116 regions the average wage was below or well below the country’s average, from BYR 4.6 million in Brest to BYR 2.93 million in Braslavsky region.

Slower wage growth in 2013 and in 2014 will impact the social situation in the labour collectives. The likelihood of strikes will increase. In 2011-2012 Belarus’ workers organized a series of successful strikes and achieved pay rises or timely payments. Thereby a precedent was created: local authorities were forced to meet workers’ ultimate demands.

The authorities’ need for external financial resources is increasing. They are under greater pressure to privatize state enterprises. Noteworthy, ‘Transistor’ Plant is an ‘Integral’ Plant branch, which is one of the five Russo-Belarusian investment priorities.